UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q/A SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter report ended September 30, 2003
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to ___________
Commission File number 000-28581
TRIAD INDUSTRIES, INC.
(Exact name of small business issuer as registrant as specified in charter)
Nevada 88-0422528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 W. Ninth Street, Suite #204, Escondido, CA 92025
(Address of principal executive office)
Registrants telephone no., including area code (760) 291-1710
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), Yes [X] No [ ] and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the last practicable date.
Class Outstanding as of September 30, 2003
Common Stock, $0.001 532,300
i
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1
Consolidated Balance Sheets - September 30, 2003
And December 31, 2002 2-3
Consolidated Statements of Operations - nine months
Ended September 30, 2003 and September 30, 2002 4-5
Consolidated Statements of Stockholders Equity 6
Consolidated Statements of Cash Flows - nine months
nded September 30, 2003 and September 30, 2002 7
Notes to Consolidated Financial Statements 8
Item 2. Managements Discussion and Analysis and
Result of Operations 9-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matter to be a Vote of 12
Securities Holders
Item 5. Other Information on Form 8-K 13
Item 6. Exhibits and Reports on 8K 13
Signatures S-1
ii
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statement
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of September 30, 2003, and
the related balance sheet of the Company as of December 31, 2002, which is
derived from the Companys audited financial statements, the unaudited statement
of operations and cash flows for the nine months ended September 30, 2003 and
September 30, 2002 and the statement of stockholders equity for the period of
December 31, 2000 to September 30, 2003 are attached hereto and incorporated
herein by this reference.
Operating results for the quarters ended September 30, 2003 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2003.
1
ARMANDO C. IBARRA
Certified Public Accountants
A Professional Corporation
Armando C. Ibarra, C.P.A.
Armando Ibarra, Jr., C.P.A., JD
Members of the Better Business Bureau since 1997
To the Board of Directors
Triad Industries, Inc.
(Formerly RB Capital & Equities, Inc.)
350 West 9th Avenue., Suite A
Escondido, CA 92025
INDEPENDENT ACCOUNTANTS REVIEW REPORT
We have reviewed the accompanying consolidated balance sheets of Triad
Industries, Inc. (Formerly RB Capital & Equities, Inc.) as of September 30,
2003, and the related statements of operations, changes in stockholders equity,
and cash flows for the nine and three months ended September 30, 2003 and 2002,
in accordance with Statements on Standards for Accounting Review Services issued
by the American Institute of Certified Public Accountants. All information
included in these financial statements is the representation of the management
of Triad Industries, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, the Company in
the past has shown significant operating losses that raise substantial doubt
about its ability to continue as a going concern. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
__________________________________
ARMANDO C. IBARRA, C.P.A. APC
November 12, 2003
Chula Vista, California
2
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
ASSETS
As of Year Ended
September 30, December 31,
2003 2002
CURRENT ASSETS
Cash $ 408,457 $ 19,832
Accounts receivable 174,148 82,312
Available for sale securities 32,959 57,001
Trading securities 113,607 -
Escrow account - property taxes - 10,102
-----------------------------
Total Current Assets 729,171 169,247
NET PROPERTY & EQUIPMENT 14,603 1,074,900
OTHER ASSETS
Investment in other companies 169,984 171,389
Net loan fees - 6,902
Security deposits 1,224 -
Deferred tax benefit - 935,343
------------------------------
Total Other Assets 171,208 1,113,634
------------------------------
TOTAL ASSETS $ 914,982 $2,357,781
===============================
3
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
As of Year Ended
September 30, December 31,
2003 2002
CURRENT LIABILITIES
Accounts payable $ 20,722 $ 25,087
Loans payable 108,776 105,800
Line of credit 5,451 7,038
Taxes payable 6,251 6,251
Client deposits 600 5,087
Trust deeds and mortgages
Short-term portion - 150,910
Total Current Liabilities 141,800 300,173
LONG-TERM LIABILITIES
Trust deeds and mortgages
Long-term portion - 583,898
Total Long-Term Liabilities - 583,898
TOTAL LIABILITIES 141,800 884,071
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par
value, 10,000,000 shares
authorized 7,500 shares
issued and outstanding for
September 30, 2003 and December
31, 2002, respectively) 7,500 7,500
Common stock ($0.001 par value,
50,000,000 shares authorized
532,300 and 504,800 shares
issued and outstanding
as of September 30, 2003
and December 31, 2002, respectively) 532 504
Additional paid-in capital 4,621,098 4,615,626
Stock subscription receivable (62,500) (62,500)
Accumulated other comprehensive loss (654,154) (640,614)
Retained earnings (deficit) (3,139,294) (2,446,806)
Total Stockholders' Equity 773,182 1,473,710
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $ 914,982 $ 2,357,781
4
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Operations
Nine Months Nine Months
Ended Ended
September 30, September 30,
2003 2002
REVENUES
Consulting income 112,989 $ 405,752
Rental income 86,371 105,318
----------------------------
Total Revenues
199,360 511,070
Costs of revenues (46,037) (32,442)
----------------------------
GROSS PROFIT 153,323 478,628
OPERATING COSTS
Bad debt expense - 9,895
Depreciation expense 34,039 33,022
Administrative expense 371,895 258,811
---------------------------
Total Operating Costs 405,394 301,728
---------------------------
OPERATING INCOME (LOSS) (252,611) 176,900
OTHER INCOME & (EXPENSES)
Interest income 112 2,692
Other income - 2,885
Other expenses (5,459) -
Net realized gain (loss) on sale of marketable securities (5,924) (20,654)
Loss in investment (5,983) (45,073)
Net gain (loss) on disposable assets 573,014 93,283
Interest expense (60,294) (63,060)
----------------------------
Total Other Income & (Expenses) 495,466 (29,927)
----------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 242,855 146,973
INCOME TAX (PROVISION) BENEFIT (935,343) (40,570)
---------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER TAXES $ (692,488) $ 106,403
============================
DISCONTINUED OPERATIONS
Loss on sale of Northwest Medical Clinic, Inc. - (1,542,394)
---------------------------
NET INCOME (LOSS) $ (692,488) $(1,435,991)
===========================
BASIC EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations $ (1.31) $ 0.25
Earnings (loss) from discontinued operations $ 0.00 $ (3.55)
----------------------------
BASIC EARNINGS (LOSS) PER SHARE $ (1.31) $ (3.30)
============================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 529,983 433,743
==============================
DILUTED EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations $ (1.27) $ 0.21
Earnings (loss) from discontinued operations $ 0.00 $ (2.96)
----------------------------
DILUTED EARNINGS (LOSS) PER SHARE $ (1.27) $ (2.76)
============================
WEIGHTED AVERAGE OF DILUTED
COMMON SHARES OUTSTANDING 543,806 518,743
Three Months Three Months
ended ended
September 30 September 30
2003 2002
REVENUES
Consulting income $ 27,784 $ 100,019
Rental income 12,052 38,851
--------------------------------
Total Revenues
39,836 138,870
Costs of revenues (14,894) (2,615)
--------------------------------
GROSS PROFIT 24,942 136,255
OPERATING COSTS
Bad debt expense - -
Depreciation expense 12,460 12,164
Administrative expense 222,455 68,122
--------------------------------
Total Operating Costs 234,915 80,286
--------------------------------
OPERATING INCOME (LOSS) (209,973) 55,969
OTHER INCOME & (EXPENSES)
Interest income 109 1
Other income - -
Other expenses (4,209) -
Net realized gain (loss) on sale
of marketable securities (1,327) (10,524)
Loss in investment (see note 9) (262) -
Net gain (loss) on
disposable assets 573,014 -
Interest expense (36,602) (14,644)
Total Other Income & (Expenses) 530,723 (25,167)
--------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES 320,750 30,802
INCOME TAX (PROVISION) BENEFIT (952,458) (4,620)
INCOME (LOSS) FROM CONTINUING
OPERATIONS AFTER TAXES $(631,708) 26,182
DISCONTINUED OPERATIONS
Loss on sale of Northwest
Medical Clinic, Inc. - -
--------------------------------
NET INCOME (LOSS) $(631,708) 26,182
================================
BASIC EARNINGS (LOSS) PER SHARE
Earnings (loss) from
continuing operations $ (1.19) $ 0.06
Earnings (loss) from
discontinued operations $ 0.00 $ 0.00
--------------------------------
BASIC EARNINGS (LOSS) PER SHARE $ (1.19) $ 0.06
================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 532,300 433,743
================================
DILUTED EARNINGS (LOSS) PER SHARE
Earnings (loss) from
continuing operations $ (1.15) $ 0.05
Earnings (loss) from
discontinued operations $ 0.00 $ 0.00
--------------------------------
DILUTED EARNINGS (LOSS)
PER SHARE $ (1.15) $ 0.05
================================
WEIGHTED AVERAGE OF DILUTED
COMMON SHARES OUTSTANDING 547,300 518,743
5
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Comprehensive Income (Loss)
Nine Months Nine Months
ended ended
September 30 September 30
2003 2002
Net Income (Loss) $ (692,488) $ (1,435,991)
Other Comprehensive Income (Loss) :
Unrealized gain (loss) on securities (13,540) (801,619)
Total Other Comprehensive Income (Loss) (13,540) (801,619)
Other Comprehensive Income (Loss)
efore Income Taxes (13,540) (801,619)
Income Tax (Provision) Benefit
Related to Items of Comprehensive Income (Loss) - 272,550
Total Other Comprehensive Income (Loss) $ (13,540) $ (529,069)
Total Comprehensive (Loss) $ (706,028) $ (1,965,060)
Three Months Three Months
ended ended
September 30 September 30
2003 2002
Net Income (Loss) $(631,708) 26,182
Other Comprehensive Income (Loss) :
Unrealized gain (loss) on securities 15,306 (228,234)
Total Other Comprehensive Income (Loss) 15,306 (228,234)
Other Comprehensive Income (Loss)
Before Income Taxes 15,306 (228,234)
Income Tax (Provision) Benefit
related to Items of Comprehensive Income (Loss) - 72,261
Total Other Comprehensive Income (Loss) $ 15,306 $(155,973)
Total Comprehensive (Loss) $(616,402) $(129,791)
6
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Stockholders' Equity
From December 31, 2000 to September 30, 2003
Preferred Preferred Common Common
shares stock shares stock
Balance, December 31, 2000 42,500 42,500 433,972 433
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share 2,500 3
Stock issued on January 18, 2001 for
management fees @ $4.19 a share 7,238 7
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share 1,255 1
Stock issued on March 1, 2001 to
management fees @ $3.40 a share 35,000 35
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share 45,000 45
Stock issued on June 22, 2001
to Directors @ $0.60 a share 18,000 18
October 1, 2001 cancellation of
stock subscription (35,000) (35)
Other comprehensive loss December 31, 2001
Net income for the year ended
December 31, 2001
- --------------------------------------------------------------------------------
Balance, December 31, 2001 42,500 42,500 507,965 507
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share (73,165) (73)
On October 15, 2002 preferred stock
converted to common stock at 2 for 1 ratio (35,000) (35,000) 70,000 70
Other comprehensive loss December 31, 2002
Net loss for the year ended
December 31, 2002
- --------------------------------------------------------------------------------
Balance, December 31, 2002 7,500 7,500 504,800 504
Stock issued on January 24, 2003
for services rendered @ $0.20 a share 27,500 28
Other comprehensive loss September 30, 2003
Net lncome for the nine months ended
September 30, 2003
- --------------------------------------------------------------------------------
Balance, September 30, 2003 7,500 $ 7,500 532,300 532
Additional Stock
paid in subscription retained
capital receivable earnings
Balance, December 31, 2000 4,460,599 (62,500) (1,045,230)
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share 8,497
Stock issued on January 18, 2001 for
management fees @ $4.19 a share 30,317
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share 3,739
Stock issued on March 1, 2001 to
management fees @ $3.40 a share 118,965 (119,000)
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share 95,955
Stock issued on June 22, 2001
to Directors @ $0.60 a share 10,782
October 1, 2001 cancellation of
stock subscription (118,965) 119,000
Other comprehensive loss December 31, 2001
Net income for the year ended
December 31, 2001 56,249
---------------------------------------------------- -------------- -------
Balance, December 31, 2001
4,609,889 (62,500) (988,981)
==================================================== ============== =======
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share (29,193)
On October 15, 2002 preferred stock
converted to common stock at 2 for 1 ratio 34,930
Other comprehensive loss December 31, 2002
Net loss for the year ended
December 31, 2002 (1,457,825)
---------------------------------------------------- ----------- ----------
Balance, December 31, 2002
4,615,626 (62,500) (2,446,806)
Stock issued on January 24, 2003
for services rendered @ $0.20 a share 5,472
Other comprehensive loss September 30, 2003
Net lncome for the nine months ended
September 30, 2003 (692,488)
---------------------------------------------------- -------------- -------
Balance, September 30, 2003 4,621,098 (62,500) $(3,139,294)
Accumulated other
compreensive total
income (loss)
Balance, December 31, 2000 (27,122) 3,760,152
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share 8,500
Stock issued on January 18, 2001 for
management fees @ $4.19 a share 30,324
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share 3,740
Stock issued on March 1, 2001 to
management fees @ $3.40 a share -
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share 96,000
Stock issued on June 22, 2001
to Directors @ $0.60 a share 10,800
October 1, 2001 cancellation of
stock subscription -
Other comprehensive loss December 31, 2001 (83,991) (83,991)
Net income for the year ended
December 31, 2001 56,249
- -------------------------------------------------------------------------------
Balance, December 31, 2001
(111,113) 3,490,302
===============================================================================
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share (29,266)
On October 15, 2002 preferred stock
converted to common stock at 2 for 1 ratio -
Other comprehensive loss December 31, 2002 (529,501) (529,501)
Net loss for the year ended
December 31, 2002 (1,457,825)
- -------------------------------------------------------------------------------
Balance, December 31, 2002
(640,614) 1,473,711
===============================================================================
Stock issued on January 24, 2003
for services rendered @ $0.20 a share 5,500
Other comprehensive loss September 30, 2003 (13,540) (13,540)
Net lncome for the nine months ended
September 30, 2003 (692,488)
- -------------------------------------------------------------------------------
Balance, September 30, 2003 (654,154) 773,183
===============================================================================
7
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Cash Flows
Nine months Nine months
ended ended
September September
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (692,488) $(1,435,991)
Depreciation expense 34,039 33,022
(Increase) decrease in accounts receivable (91,836) 1,848,238
(Increase) decrease in advances - 5,815
(Increase) decrease in escrow account 10,102 (2,916)
(Increase) decrease in income tax benefit 935,343 (104,428)
Increase (decrease) in accounts payable (4,365) (40,654)
Increase (decrease) in security deposits (5,711) (3,182)
Increase (decrease) in salaries payable - 27,050
Increase (decrease) in taxes payable - (3,774)
Net (Gain)/Loss from the sale of securities 5,924 20,654
Common stock issued for services 5,500 -
Net (Gain)/Loss on investments 5,983 45,073
Net Cash Provided by (Used in)
Operating Activities 202,491 388,907
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of trading securities (113,607) -
Net sale (purchase) of fixed assets 1,026,258 (38,227)
Net Cash Provided by (Used in)
Investing Activities 912,651 (38,227)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (1,587) (22,718)
Change in loan fees 6,902 5,932
Change in loan payable 2,976 -
Change in notes and mortgages payable (734,808) (459,256)
Change in common stock - (1,463)
Change in paid in capital - (27,803)
Change in assets hels for sale - 167,514
Net Cash Provided by
(Used in) Financing Activities (726,517) (337,794)
Net Increase (Decrease) in Cash 388,625 12,886
Cash at Beginning of Period 19,832 15,643
Cash at End of Period $ 408,457 $ 28,529
Supplemental Cash Flow Disclosures:
Cash paid during period for interest $ 60,294 $ 48,416
Cash paid during period for taxes - -
Schedule of Non-Cash Activities:
Common stock issued for accrued services $ - $ -
Common stock received for services $ - $ 150,000
==============================================
Common stock retired on the
of Northwest Medical Clinic, Inc. $ - $ 29,266
==============================================
Loss on sale of Northwest Medical Clinic $ - $ 1,542,394
==============================================
Three months Three months
ended ended
September 30 September 30
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (631,708) $ 26,182
Depreciation expense 12,460 12,164
(Increase) decrease in accounts receivable (90,869) 207,738
(Increase) decrease in advances - 4,800
(Increase) decrease in escrow account 7,705 (3,343)
(Increase) decrease in income tax benefit 945,731 (9,080)
Increase (decrease) in accounts payable (16,412) 3,142
Increase (decrease) in security deposits (7,450) -
Increase (decrease) in salaries payable - 900
Increase (decrease) in taxes payable - -
Net (Gain)/Loss on sale of securities 1,327 10,524
Het (gain) / Loss on investments 262 -
Common stock issued for services - -
Net Cash Provided by (Used in)
Operating Activities 221,046 253,027
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of trading securities (113,607) -
Net sale (purchase) of fixed assets 1,026,758 6,356
Net Cash Provided by (Used in)
Investing Activities 913,151 6,356
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (776) (1,289)
Change in loan fees 6,750 5,807
Change in loan payable (3,306) -
Change in notes and mortgages payable (729,311) (249,438)
Change in common stock - -
Change in paid in capital - -
Change in assets hels for sale - -
Net Cash Provided by (Used in)
Financing Activities (726,643) (244,920)
Net Increase (Decrease) in Cash 407,554 14,463
Cash at Beginning of Period 903 14,066
Cash at End of Period $ 408,457 $ 28,529
Supplemental Cash Flow Disclosures:
Cash paid during period for interest $ 45,634 $ 19,410
==============================================
Cash paid during period for taxes $ $
Schedule of Non-Cash Activities:
Common stock issued for accrued services $ $ -
Common stock received for services $ $ -
==============================================
Common stock retired on the sale
of Northwest Medical Clinic, Inc. $ $ -
==============================================
Loss on sale of Northwest Medical Clinic $ $ -
==============================================
8
371 E Street, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying September 30, 2003 financial statements have been prepared
by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at September 30,
2003 and 2002 and for all periods presented have been made. Certain information
and Footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Companys December 31, 2002 audited financial
statements. The results of operations for periods ended September 30, 2003 and
2002 are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Companys consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of liabilities
that might result from the outcome of this uncertainty. It is management intend
to seek additional operating funds through operations, and debt or equity
offerings. Management has yet to decide what type of offering the Company will
use or how much capital the Company will raise. There is no guarantee that the
Company will be able to raise any capital through any type of offerings.
NOTE 3 - SALE OF DISPOSABLE ASSET
On July 31, 2003 the Company closed escrow on the sale of thier commercial
property located at 350 West 9th Avenue Escondido, Ca 92025. The sales price on
the commercial property was $1,680,000 dollars with the Company netting $835,000
in proceeds. However, the gain on the sale of the property was $573,014 before
any tax implications.
NOTE 4 - DESCRIPTION OF BUSINESS
The Company operate through its three subsidaries:
1. RB Capital and Equities, Inc., is a finacial services corporation that
operates a merger and acquisition consulting business. The company does
corporate filings and capital reorganizations business for small emerging
private and public corporations.
2. HRM, Inc., is presently inactive in the healthcare industry.
3. Corporate Capital Formation, Inc., is a financial services corporation that
operates a merger and acquisition consulting business.
Triad Industries, Inc., (the parent company) in now a holding company.
9
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of September 30, 2003, the Company has $729,171 in total current assets
compared to total current assets of $169,247 as of December 31, 2002. The major
factor in the increase of current assets was the sale of the 350 West Ninth
Avenue commercial property, in which the company received proceeds of
approximately $835,000 and recognized a gain from this asset disposal of
$573,014. When comparing the current assets of the Company with December 31,
2001, there is an increase of $559,924. The cash proceeds were used to pay down
accounts payable, to purchase a portfolio of trading securities, and $408,457 is
still held in cash. As of September 30, 2003 the Company holds $146,566 in
trading and available for sale securities compared to $57,001 of available for
sale securities as of December 31, 2002. As of September 30, 2003 the current
assets were comprised of $408,457 in cash, $174,178 in accounts receivable, and
$146,566 in securities.
As of September 30, 2003 the Company has $141,800 in total current liabilities
compared to $300,173 as of December 31, 2002. The most notable decrease in
current assets comes from the decrease of the current portions of notes payable.
This decrease of $150,910 is due to the sale of the commercial property.
Security deposits payable decreased by approximately $4,500 for the same
reason.
Results of Operations
For the three months ending September 30, 2003 the Company had a net loss in the
amount of $631,708 compared to net income in the amount of $26,182 for the same
period of 2002. The Company experienced a net gain of $573,014 from the sale of
the Companys commercial property. It should be noted that upon the sale of the
commercial building the Company no longer has any functions in the real estate
sector. A contributing factor to the net loss was that management determined a
deferred tax benefit of $952,458 was impaired because its value exceeded the
fair value management believed the Company would receive from the asset.
In determining whether or not to have a valuation allowance against the deferred
tax benefit the Company has impaired, management was required to evaluate both
positive and negative evidence in making any determination. In determining that
a valuation allowance was necessary, management feels that there is more
negative than positive evidence regarding the deferred tax benefit.
The major influence in the opinion of management regarding negative evidence
stems from the Company continuing to have operating losses. Although
historically a large portion of the operating losses was caused by non cash
transactions, the fact remains that the Company is still operating at a loss.
Management had also hoped for a rebound from the financial services sector which
had performed well prior to 2002. However, the financial services sector has not
turned around.
In terms of positive evidence management considered the following: The 350 West
Ninth Avenue property had been appreciating rapidly and the Company had no plans
to sell the property. Also, as previously mentioned a large part of the
Companys historical losses were from non cash transactions.
Therefore, in terms of the impairment of the deferred tax benefit management
concluded that since the Company had just sold the property, the financial
services sector had not turned around and the Company was still operating at a
loss. It was more likely than not that the deferred tax benefit would not be
recognized.
The loss from continuing operations also includes $12,460 in depreciation and
amortization expense compared to $12,164 for the same period of 2002.
Administrative expenses also increased $154,333 for the third quarter of 2003
compared to the same period of 2002. This increase is predominately caused by
the increase of operating expenses of the financial services sector. Costs such
as payroll, insurance, workers comp, and rental expense have all increased.
There was a sharp increase in interest expense in the third quarter of 2003.
Interest expense increased from $14,644 for the three months ended September 30,
2002 to $36,602 for the three months ended September 30, 2003. This is due to
the Company having a prepayment penalty on the commercial property note. The
Company also had a net loss on the sale of marketable securities of $1,327 for
the three months ended September 30, 2003 compared to a net loss of $10,524 for
the same period the year before. The Company had revenues of $39,836 for the
three months ended September 30, 2003 compared with $138,870 for the same period
last year. In the opinion of management, unsteady financial markets
10
yielded a sharp decline in revenues to the Company's two financial services
subsidiaries. Management is hoping that the financial services sector will start
to improve in the next two quarters.
For the nine months ended September 30, 2003 the Company had a net loss from
continuing operations after taxes of $692,488 compared to net income from
continuing operations after taxes of $106,403 for the same period of 2002. The
main contributor to the increase in income before taxes was a gain of $573,014
from the sale of the Companys commercial property. It should be noted that upon
the sale of the commercial building the Company no longer has any functions in
the real estate sector. The factor contributing to the loss after taxes was that
management determined a deferred tax benefit of $935,343 was impaired because
its value exceeded the fair value management believed the Company would receive
from the asset.
In determining whether or not to have a valuation allowance against the deferred
tax benefit the Company has impaired, management was required to evaluate both
positive and negative evidence in making any determination. In determining that
a valuation allowance was necessary, management feels that there is more
negative than positive evidence regarding the deferred tax benefit.
The major influence in the opinion of management regarding negative evidence
stems from the Company continuing to have operating losses. Although
historically a large portion of the operating losses was caused by non cash
transactions, the fact remains that the Company is still operating at a loss.
Management had also hoped for a rebound from the financial services sector which
had performed well prior to 2002. However, the financial services sector has not
turned around.
In terms of positive evidence management considered the following: The 350 West
Ninth Avenue property had been appreciating rapidly and the Company had no plans
to sell the property. Also, as previously mentioned a large part of the
Companys historical losses were from non cash transactions.
Therefore, in terms of the impairment of the deferred tax benefit management
concluded that since the Company had just sold the property, the financial
services sector had not turned around and the Company was still operating at a
loss. It was more likely than not that the deferred tax benefit would not be
recognized.
Depreciation and Amortization was increased approximately $1,000
for the nine months ended September 30, 2003 to $34,039. The Company had a
net gain on the sale of disposable assets in the amount of $573,014 for the
nine months ended September 30, 2003 compared to a net gain on the sale of
disposable assets of $93,283 for the same period of 2002. The Company had a
loss from an investment it accounts for on the equity method of $5,983 for
the nine months ended September 30, 2003 compared to a loss of $45,073 for
the same period the year before.
The Company had revenues of $199,360 for the nine months ended September
30, 2003 compared with $511,070 for the same period last year. For the nine
months ended September 30, 2002, it should be noted that the Company had
recognized $150,000 in common stock received for services, whereas 2003
does not have any common stock received for services. In the opinion of
management, unsteady financial markets yielded a sharp decline in revenues
to the Company's two financial services subsidiaries. Management is hoping
that the financial services sector will start to improve in the next two
quarters.
The Company functions in two sectors: financial services and real estate*.
Nine Months Ending September 30, September 30, 2003 2002
Financial Services $112,989 $405,752
Real Estate 86,371 105,318
Total $199,360 $511,070
*The Company sold its last real estate holding on July 31, 2003.
For the three months ended September 30, 2003 the Financial Services sector
was off significantly when compared to the same period of 2002. Financial
Services revenue decreased $72,235 when comparing the third quarter of 2003 to
the same period of 2002. Accounting for a large portion of this decrease was
that for the nine months ended September 30, 2002, it should be noted that the
Company had recognized $150,000 in common stock received for services, whereas
2003 does not have any common stock received for services. In the opinion of
management this decrease was due to further unsteady financial markets. These
deteriorating financial markets made liquidity very difficult on small companies
who are the primary clients of the financial services sector. Operating costs in
this sector remained fairly constant except for an approximate increase of
$30,000. Costs such as payroll, insurance, workers comp, and rental expense have
all increased.
The Company sold its last real estate holding on July 31, 2003. Therefore
no comparative information is presented. The Company did recognize a gain
of $573,014 from the sale of the commercial property.
11
For the nine months ended September 30, 2003 the Financial Services sector
was off approximately 60%. In the opinion of management this was due to
unsteady financial markets. Accounting for a large portion of this decrease
was that for the nine months ended September 30, 2002, it should be noted
that the Company had recognized $150,000 in common stock received for
services, whereas 2003 does not have any common stock received for
services. These deteriorating financial markets made liquidity very
difficult on small companies who are the primary clients of the financial
services sector. Once again operating costs remained fairly constant. .
Operating costs in this sector remained fairly constant except for an
approximate increase of $28,000. Costs such as payroll, insurance, workers
comp, and rental expense have all increased.
Net Operating Loss
The Company has accumulated approximately $3,139,294 of net operating loss
carryforwards as of September 30, 2003, which may be offset against taxable
income and incomes taxes in future years. The use of these to losses to
reduce future incomes taxes will depend on the generation of sufficient
taxable income prior to the expiration of the net loss carryforwards. The
net loss carryforwards expire from the years 2019 till 2023. In the event
of certain changes in control of the Company, there will be an annual
limitation on the amount of carryforwards, which can be used. A tax benefit
has been recorded in the Companys financial statements for the year ended
December 31, 2002 in the amount of $935,343. This tax benefit was
subsequently impaired, when the carrying amount of the asset exceeded its
fair market value. Therefore, no tax benefit is any longer recorded in the
Companys financial statements.
Controls and Procedures
We have instituted disclosure controls and procedures designed to ensure
the timely recording, processing, summarization and reporting to our
management, including our Presidient, of information required to be
disclosed in our reports under the Securities Exchange Act of 1934, as
amended (the Exchange Act). Within the 90 days prior to the filing date
of this Quarterly Report on Form 10-QSB, we have performed an evaluation of
the effectiveness of the design and operation of these controls under the
supervision and with the participation of our management, including our
President. Based upon that evaluation, the President has concluded that the
disclosure controls and procedures effectively alert management to material
information related to the Company in a manner which allows timely
decisions regarding required disclosures of such information. In the design
and evaluation of our disclosure controls and procedures, management has
recognized that risks of misstatements due to error, failures in
compliance, or changes in conditions are inherent in any cost-effective
control system. Thus, management can provide only reasonable assurance that
its controls and procedures will achieve their stated goals under all
potential future conditions. There have been no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of managements evaluation.
Sale of Common Capital Stock
None.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
The Company wished to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking
statements involve the risk and uncertainties that could cause actual
results to differ materially from those expressed on or implied by the
statements, including, but not limited to, the following: the ability of
the Company to successfully meet its cash and working capital needs, the
ability of the Company to successfully market its product, and other risks
detailed in the Companys periodic report filings with the Securities and
Exchange Commission.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None.
12
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. Exhibit 31.1 Section 302 Certification pursuant to Section 302 of the
Sarbanes - Oxley Act of 2002.
Exhibit 32.2 Section 302 Certification pursuant to Section 302 of the
Sarbanes - Oxley Act of 2002.
Exhibit 99.1 Section 906 Certification pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002.
Exhibit 99.2 Section 906 Certification pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002.
b. Reports on Form 8K
Filed by reference on August 12, 2003.
c. Form 10QSBA filed by reference on August 25, 2003
Form 10QSB filed by reference on August 15, 2003
Form 10KSBA filed by reference on August 15, 2003.
Form 10QSBA filed by reference on August 14, 2003
Form 10Q filed by reference on August 13, 2003.
Form 10QSB filed by reference on Juy 14, 2003.
Form 10QSB filed by reference on Juy 14, 2003.
Form 10QSB filed by reference on Juy 14, 2003.
13
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TRIAD INDUSTRIES, INC.
Dated: September 13, 2003
By:/S/Linda Bryson
Linda Bryson
President, Director
By:/S/ Michael Kelleher
Michael Kelleher
CFO
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